You are correct in your assertion that people are shopping online for price and that the big websites are tracking and targeting customers.

I just thought I would bring up one other thought on this topic. I believe the reason certain retailers are rot gut cheap in their online pricing is not because they are taking a loss to build a database of customer, but because these “retailers” are really the “manufacturers.” I think genuine retailers are having to compete with their own suppliers now. The supplers, not wanting to lose the retailers at this point, have set up dummy websites from which they are wholesaling to the public.

I have come to this conclusion because I’ve been in the tool business since 1989, our brick and mortar store has been pricing and buying from suppliers and directly from manufacturers for over 20 years, and I can read the pricing structure. For example, a wrench that would cost us $8.31 to purchase from the manufacturer is being sold online for $8.11. To the retail shopper, the $8.11 price tag is a steal, but to the retailer, we know that when the item is sold for $8.11, the only way the seller can make money is if they are producing the item.

In my industry it comes down to this: does the manufacturer have the resources to run their own website and sell their own goods? If so, don’t bother trying to compete on that line of items. If not, put that line of products in to your online inventory and see what you can do, because you won’t have to be competing with that supplier or manufacturer online.

In conclusion, I think we are looking at the technological revolution in this country. The entire supply chain is being upended for retailers nationwide. Why should the manufacturers and suppliers, with plenty of resources, waste time on their retailers, when they can make more money going directly to the consumer? They are simply cutting the middle man out of the equation.

The wrong way for a small retailer is stick on ecommerce the same conception of brick and mortar. Auction is a different way to compet.

if a retailer is too little and cannot manage lots of complex informations in order to segment clients as bigger retailers do, the solution could be letting the market supply, i.e. auctioning items, so the shoppers decide the prices, instead of waisting resources trying to understand what the shoppers are willing to pay.

Again to readers, I’m not saying to not have a great website. You must. What I’m talking about here is a product page with shopping carts, etc.

I sat in an ASTRA session a few years ago and wondered what the Internet would look like when 500 indie stores all opened online sites as this guy was suggesting. Here in Jackson I compete against a handful of big box stores and I have the upper hand in products and services to do it better than the competition. But online I’ll compete against hundreds of sites with all the same products and services, and I won’t have the resources to do it as well as the big boys.

Plus, what no one is talking about is that although online sales are growing, in 2008 they only accounted for 3.3% of all retail sales. That just isn’t a big enough pie to try to get a bite out of right now.

You make some very good points in your article. Your assessment of just how far the technology has evolved in regard to demographic and even “psychographic” profiling of the consumer is spot on. However….

I wholeheartedly disagree with your blanket statement to retailers (independent or otherwise) that they should completely forego an online eCommerce presence. If you will allow me to loosely quote your idea: “if you can’t be as committed as….then put your money elsewhere”; I feel that this statement should be highly tempered.

You might be correct if you are assuming that your audience is planning on investing millions of dollars into their online store and are expecting a huge ROI, but that is just not the case for most of the ones I know. I just happen to specialize in helping independent retailers (shameless plug) who on average have brick and mortar stores that generate about $350k to $1M in gross sales. With a minimal investment, retailers in this category can do $300 to $500K online to compliment their B&M and sometimes even do it more profitably (Their website doesn’t call in sick, doesn’t need health insurance etc.)

As a matter of fact a great online presence in my opinion actually enhances the credibility of the retailer in the eyes of the consumer. You are correct in fact the site does need to be engaging, interactive and current. You are dramatically overestimating how difficult and expensive those attributes are to accomplish. Social Media Marketing is perfect for brand building and establishing a good rapport with your clientele and for the most part it’s free to use channels such as Twitter and Facebook to drive traffic to your site.

Anyway; to summarize the main point of contention in my opinion compared to yours, you are correct if you are addressing someone that owns a chain of 30 electronics stores that might need to spend a million dollars in establishing his online store. If his major competitors are the Bestbuys and Conn’s of the world he is most likely making a bad investment. However; you are totally incorrect if you are speaking to the guy that owns 3 shoe stores, each of which are doing $300K in volume. If you think for one minute that that guy would not jump at the chance to have an online store that did the same amount as one of his “brick and mortars”, for an investment of just a few thousand dollars, then you don’t hang with the same crowd of independents that I do.

Best regards,

Mike